China has begun mass-producing deep ultraviolet (DUV) immersion lithography machines, essential for manufacturing semiconductors that power the world’s most advanced electronic devices. In an effort to reduce its dependence on US and European manufacturers, China has expanded domestic chip manufacturing in response to restrictions implemented by the Dutch government (thanks to pressure from the US) in 2023 and more recently in 2025. US restrictions also led to the ban of Nvidia’s AI graphics cards in China in 2025.
A little-known Chinese state-owned manufacturer called Shanghai Aishengna Electronic Technology Group is at the forefront of lithography equipment manufacturing in China. The Chinese government has also channeled talent from other Chinese semiconductor startups to this company as part of talent consolidation efforts. China is making great strides to move away from relying on machines built by Advanced Semiconductor Materials Lithography (ASML) and plans to build five machines in 2026 and 20 by 2027. ASML is the world’s most prolific lithography machine maker, currently enjoying a 90% hold on the global lithography equipment market.
The company is also the only manufacturer in the world capable of making extreme ultraviolet (EUV) lithography machines, used to efficiently make chips seven nanometers or smaller. If other geopolitical factors lead to more restrictions, China may have the ability to maintain its chip supply to advance its technology and protect its technology exports. China is also experimenting with making photonic chips, which operate using light rather than electricity. Not only are they better for the environment, but they are also faster and more powerful than traditional chips. This shows that the future of computer chips goes far beyond simply replacing electricity.
The strategic importance of domestic semiconductor manufacturing
For China, achieving full autonomy in mature chip manufacturing is of utmost importance. The U.S.-imposed restrictions enforced by the Dutch government constitute a key political maneuver that could harm not only China’s technology exports but also its war machines. In October 2025, the US Special Committee on China revealed that a months-long investigation had uncovered sales of ASML-produced equipment to Chinese companies linked to military development and highlighted the dangers this posed to US national security.
Companies like ASML have so far only adhered to export regulations, and if the current geopolitical environment continues on its current trajectory, further restrictions could cut off Chinese chipmaking supply chains from Western companies like ASML. Even if China is making progress in manufacturing these lithography machines domestically, there is no indication that the country would pose an immediate risk in capturing market share from ASML. China isn’t far behind Western technology, but this Chinese advance could change microprocessors forever.
China has so far only been able to manufacture DUV machines, which are far less efficient than the EUV machines produced by ASML in manufacturing modern standard chips. While DUV machines can produce chips seven nanometers or smaller, EUV machines can do so much more efficiently. However, it is not far from achieving this. The country has already successfully designed a prototype EUV machine, and if the technology can be applied to mass production, China will have a real chance to end ASML’s monopoly in the international market.
